Government nods sale of its 53% stake in REC to Power Finance Corp

The Cabinet Committee on Economic Affairs (CCEA) on Thursday accorded in-principle approval for the strategic sale of the governments existing 52.63 per cent majority shareholding in the Rural Electrification Corporation (REC) to the state-run Power Finance Corporation (PFC), along with transfer of management control.

A CCEA communique following the cabinet meeting said this sale of the government's equity holding in REC to PFC is designed to achieve integration across the power chain, obtain better synergies and have improved capability to finance the power sector.

"It may also allow for cheaper fund raising with increase in bargaining power for the combined entity," it said.

Briefing reporters here on the cabinet decisions, Finance Minister Arun Jaitley said that both entities will continue to remain separate companies, while the "shareholding of one company will control that of the other".

Both PFC and REC are central public eector enterprises under the Power Ministry.